Gold, copper advance as SVB fallout triggers flight to safety
BNN Bloomberg
Gold extended gains and copper dropped as the collapse of Silicon Valley Bank soured risk sentiment and curbed expectations for more aggressive rate hikes by the Federal Reserve.
The American lender’s demise sparked such a severe drop in regional bank stocks that automatic trading halts were triggered on Monday. More broadly, more than half the companies in the S&P 500 Index fell while two-year Treasury yields headed for the biggest daily slump in decades.
“With two-year yields almost down 1 per cent in less than a week and the market increasingly pricing away the prospect for a rate hike, gold has to go higher,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “Gold is the most rate- and dollar-sensitive commodity.”
t’s a rapid turnaround for gold, which in the year prior to last week’s rapid meltdown of SVB was down 12 per cent. The precious metal has now jumped above its 50-day moving average, signaling a change in momentum.
